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ACTUARIAL CASE LAW REVIEW

Issue 124 – Monday 8 July 2024

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ACTUARIAL – Loss of income – Scarring and emotional impact – No brain injury but rather psychological impact – Pre-accident contingency of 15% too low when sliding scale indicating at least 30% – Uncertainties of child’s ability to reach NQF 7 – Post-accident NQF 6 changed to NQF 5 by educational psychologist between two reports – Court not placed in position to understand change, so accepting first report – Child doing well at school – Actuary to recalculate with uninjured contingencies of three scenarios at 40%, 50% and 60% and injured earnings at NQF level 6.

Facts: In 2014, a mother and her four-year-old child, PM, were in a motor vehicle accident in Kempton Park. The child's injuries included facial lacerations and a soft injury to his right lower leg. The one scar has a Y-shape and is on the child’s right cheek. The other navigates close to his mouth and another is close to his eyelid, resulting in a drooping eye-lid. There was no haemorrhage and no facial or skull fractures. The CT scan showed no abnormalities. Mr PM’s GCS was one of 15/15 and there is no history of loss of consciousness. No surgery was required. Subsequent medical examinations indicate no tenderness or swelling on the right leg. The plastic and reconstructive surgeon says that the scars are cosmetically unsightly and disfiguring, conspicuous and difficult to conceal. They are permanent with some prospects of scar improvement by scar revision techniques. Mr PM suffered from considerable physical pain and he is still suffering from emotional pain due to his cosmetically disfiguring scars.

Claim: The merits were settled at 100%. In terms of a previous court order, the RAF’s defence was struck out. The determination of general damages has to be postponed sine die pending a determination by the HPSCA. The WPI is determined by the experts to be at 13% – but Mr PM may qualify under the narrative test. The claim is solely one for the facial disfigurement which affects Mr PM’s self-confidence and has resulted in a post-traumatic stress disorder and a depressed mood. The claim does not include one for a brain injury, but rather the “intense psychological impact”. Young Mr PM is teased at school for these scars and has been given the unkind nickname of Mr Scratch. The identification of the scars and emotional impact on Mr PM is therefore the issues at play in this matter. The impact of these, contends the plaintiff, is that it has affected his future earnings. The plaintiff claims just shy of R 9 million in damages for future loss of earnings.

Uninjured: The plaintiff seeks for the loss to be calculated with a future uninjured loss at the level of NQF7 with a 15% contingency. So much of a child’s life is deeply uncertain. The only other available information that is relied on in these circumstances are the labour market and the immediate circumstances of the child. In this case, those are that his mother obtained a nursing certificate post matric and that his father completed matric. His sole sibling, an older sister, had not passed matric. The uncertainties in relation to young Mr PM’s ability to reach the NQF 7 as postulated by the educational psychologist would require a higher contingency than the usual contingency to be applied. The plaintiff has relied on 15% contingencies for uninjured income. This is incorrect. A sliding scale is used to determine uninjured earnings, and the applicant’s contingency based on Koch’s sliding scale of 0,5% per year until retirement, should be at least 30%. Even before considering the uncertainties abounding in relation to the NQF 7 determination, an appropriate contingency is double what the plaintiff’s lawyers have proposed.

Future injured: The educational psychologist filed two reports. The court was favoured with only one. In the first one an injured NQF 6 was postulated for Mr PM. The addendum to the first report postulates an injured NQF 5. The industrial psychologist then amended her report in light of the addendum. The only reference to a change, which is found in the report, is how well the child is doing in school. Young Mr PM is doing – often above average – well in school. It is not explained how this would decrease his chances of reaching his potential – as one would assume the opposite to be true. His performance has been ranging between meritorious and outstanding achievement. His score card shows 85% and 93% for English and Life Skills and an A+ in maths. If anything, the subsequent events show the absence of a basis to believe that the child’s possibility of reaching his potential has decreased as a result of the accident. Yet, this is used to contend that his potential has dropped. The court has not been placed in a position to understand this change. In these circumstances, the court accepts the first report. This requires a recalculation by the actuary.

Order: The plaintiff’s actuary is to recalculate the loss on the following premises:

(i) Uninjured requires a recalculation of the contingencies, on three scenarios (i) 40% (ii) 50% and 60%.

(ii) Injured, an NQF level 6, as identified in the first report of the educational psychologist is to be used to calculate the earnings and then to provide contingencies calculated at 25%.

The plaintiff is afforded an opportunity to address the court, through written submissions, solely on the appropriate contingencies based on the recalculation of the injured projections.

DE VOS AJ

ACTUARIAL – Loss of income – Proof – Plaintiff must adduce evidence of her income to enable court to assess her loss – Plaintiff unemployed at time of accident and still unemployed – Collateral information not obtained – Information that industrial psychologist relied on for plaintiff's stated loss of earnings was wholly inadequate – Actuarial calculations, in turn, are unsound – Insufficient evidence to substantiate loss claimed by plaintiff – Absolution from instance granted in respect of plaintiff's loss of earnings and earning capacity.

Facts: The plaintiff was a passenger in a motor vehicle that was involved in an accident. The plaintiff had a Grade 10 as her highest qualification. She commenced her working life around age 15 years (still attending school at the time) as a part-time Packer at a Spar. She then had a sales and administrative position at "Water Park", Edgars. Around 2000 she decided to be home based and raise her children full-time. She was unemployed at the time of the motor vehicle accident in 2019 and still is at present. At the time of the motor vehicle accident, she was 39 years of age and unemployed. Should she attempt to secure work, she would still be an unskilled worker.

Claim: The court previously granted an order in terms of which the Fund was found liable for the plaintiff's proven damages to the extent of 100% whilst the issue of general damages is postponed sine die. This judgment will only deal with loss of earnings/earning capacity.

Discussion: As a result of the collision, the plaintiff sustained injuries including traumatic brain injury, cervical spine injury, right and left shoulder injuries, soft tissue injury at the sternum, abdominal injuries and multiple lacerations. There were a number of medico legal experts who assessed the plaintiff and prepared reports, including a general practitioner, orthopaedic surgeon, neurologist, neurosurgeon, plastic surgeon, clinical psychologist, occupational therapist, industrial psychologist and an actuary. According to the industrial psychologist, collateral information was not obtained and is not available, owing to compliance and adherence to the restrictions and limitations as stipulated in the Protection of Personal Information Act 4 of 2013. Therefore, there is no collateral information before the court.

Findings: But for the accident it can be postulated that she would have been able to continue to function as an unskilled worker. It is trite that the plaintiff must prove the extent of her loss and damages on a balance of probabilities. With regard to loss of income the plaintiff must adduce evidence of her income in order to enable the court to assess her loss of past and future earnings. In order to determine a plaintiff's claim for future loss of income the court must compare what the plaintiff would have earned if it were not for the accident with what she would likely have earned after the accident. The information that the industrial psychologist relied upon for the plaintiff's stated loss of earnings is wholly inadequate. It follows that the actuarial calculations are in turn unsound. The plaintiff is required to prove the loss that she suffered. There is insufficient evidence to substantiate the loss claimed.

Order: Absolution from the instance is granted in respect of the plaintiff's loss of earnings/earning capacity. The Fund is ordered to furnish the plaintiff with an undertaking in terms of section 17(4)(a) of the Road Accident Fund Act 56 of 1996. The issue of general damages and past medical expenses is postponed sine die.

PIENAAR AJ

ACTUARIAL – Liability – Plaintiff’s version – RAF 1 form missing details of driver and vehicle – Alleged that employer’s vehicle was speeding and plaintiff fell from moving vehicle – Hospital records record that plaintiff fell from stationary truck – Plaintiff not hospitalized – Injuries would have been more serious had she fallen from speeding vehicle – Court finds plaintiff’s evidence unreliable and untruthful – Would be able to claim for fall from stationary vehicle but this not her pleaded case – Claim dismissed.

Facts: The plaintiff testified that at the time of the accident in 2020, she was employed as a security personnel member at Sinqobile Security. PRASA appointed Sinqobile Security to guard its premises in Brakpan. One day the plaintiff was a passenger in her employer’s vehicle who was transporting security personnel traveling from Daveyton to Brakpan. After the vehicle offloaded those who were working at Apex station, the vehicle left with others, including her, and they were posted elsewhere. The plaintiff was seated at the back of the vehicle when the door suddenly opened and she fell out of the speeding car, landed on the road and sustained injuries. The plaintiff testified that she does not know the name of the road, but it was a tarmac road in Apex. The vehicle did not stop after the plaintiff fell off as the driver was driving at an excessive speed. The driver made a U-turn to check on her and she was lying on the road. Her employer took her to Life Glenwood Hospital for treatment.


Claim: The Plaintiff claims R1,235,883.50 for loss of earnings. The plaintiff had lodged a claim with the Compensation Commissioner in terms of the Compensation for Occupational Injuries and Diseases Act 130 of 1993 as she was injured in the course of her employment. The court was informed that the Compensation Commissioner had not made any settlement offer at the time of the trial.


Discussion: The plaintiff was the only witness who testified to support her claim. In the particulars of the claim, it is alleged that the driver lost control and caused the accident. She states that as a result of this accident, she suffered serious injuries and was admitted to Glenwood Hospital. However, she was not hospitalised and the treatment plan included analgesia, rest and elevation. In her particulars of claim, the plaintiff failed to disclose how the accident occurred. Both in her particulars of claim and section 19(f) affidavit, she only states that she was involved in an accident or collision. In the RAF 1 Form, the plaintiff failed to complete crucial information regarding the accident. The registration number of the vehicle, the driver's physical address and the driver's contact details were not completed. Instead, the plaintiff inserted the words "Not Applicable." This information could have been obtained easily as the plaintiff was conveyed by her employer's vehicle to her workstation. The plaintiff did not provide any information regarding the workman's compensation, employment details or employer details, instead, she inserted the words "not applicable."


Findings: According to Life Glenwood Hospital Clinical records, it is recorded that the plaintiff came in walking, verbalizing that she fell from a truck and now has a painful right shoulder and arm. The patient's history recorded that the plaintiff fell out of a truck while stationary and the door accidentally opened. The independent sources do not support the plaintiff's evidence that she fell off the moving vehicle that was driven at an excessive speed. When the court asked the applicant why the hospital records the mechanism of injury different with the one she gave on her evidence, the plaintiff did not explain and she insisted on her version that she fell from a speeding truck. Given the scenario painted by the plaintiff, that she fell from the truck that was moving at an excessive speed to the extent that the driver lost control of the vehicle, the plaintiff’s injuries ought to have been far more serious than the ones recorded in the hospital records. The plaintiff’s expert assessed her whole-body impairment at 0% and stated that the injuries have not resulted in non-serious long-term impairment/loss of body function. The court finds the plaintiff’s evidence unreliable and untruthful and believes the plaintiff was involved in an accident arising from a stationary vehicle. She would still be entitled to compensation for proven damages for injuries sustained, even in the case where the vehicle was stationary. However, since this is not the plaintiff’s pleaded case, her claim falls to be rejected.


Order: The plaintiff’s claim is dismissed with no order as to costs.

FLATELA J

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BOOKS / RESEARCH / ARTICLES

Authors:  Hans Fehr and Adrian Frohlich


This paper develops a general equilibrium life-cycle model with endogenous retirement that focuses on the interplay between old-age pensions (OAP) and disability pensions (DP) in Germany. Germany has introduced a phased-in increase of the normal retirement age from age 65 to 67 (Reform 2007) and closed off other routes to early OAP retirement. This reform was followed by a phased-in expansion of future DP benefits (Reform 2018). Our simulation results indicate that the first reform will induce a shift toward DP retirement, while the Reform 2018 will even neutralize the financial and economic gains of the Reform 2007 if current DP eligibility and benefit rules remain unchanged. We therefore highlight the increased relevance of DP when reforming the retirement system and retirement incentives in an aging society. Securing the financial stability of public pensions requires activation and rehabilitation of sick elderly in the workforce and tight access to disability benefits.

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